Monday interview: Conduit Finance MD Jamie Davidson

When his plans to become a professional rugby player didn't work out, Conduit Finance managing director Jamie Davidson says he had to adjust his expectations, and he entered a different field '“ that of financial services.

Jamie Davidson says Conduit Finance has enjoyed 'fairly significant' levels of growth. Picture: Neil Hanna

Having started out doing pension filing, he later held roles at Prudential, Aegon, Clydesdale Bank and Bank of Scotland. But it became apparent to him that the focus at the time at such firms was on quantity rather than quality, and with little to differentiate each provider’s proposition when it came to a property or SME loan, for example.

“Everyone was going in the same direction,” he says, with inspiration to set up Edinburgh-based Conduit Finance coming from those giving him deals.

“I’d receive transactions in the bank from an accountancy firm or from an individual adviser and they were doing, in my view, a pretty poor job of representing their clients, of driving value for that client.”

He set up the Edinburgh-based business in 2007, with most of its transactional flow in the property sector. “The stuff that we were doing was outside what you might call retail bank lending,” he adds, covering “interesting structures and in a fairly challenging subsector of the market, which was development finance”.

• READ MORE: Jamie Davidson: Rise of non-performing loans bad for SMEs

But the financial crash was looming, and while Davidson Conduit did well in 2007/8 and into 2009, then “the phone stopped ringing and there was virtually no fee income, so we had to have a look around and find out what the market wanted and how we responded to that”.

It moved into restructuring, with Davidson explaining: “A lot of companies were trapped by their banks – they were overgeared when they were revalued and they were in breach of their lending covenant, so we started acting for borrowers in an advisory capacity to help them extricate themselves from banks. We started defending the client against the bank.”

There were various challenges around maintaining business liquidity, refinancing and helping the business owners, he points out, adding that it involved becoming a mediator, a side he grew to enjoy.

There had been cases where Conduit had finally agreed terms with a bank that people had been fighting for years. But then a moment came when “we can refinance and we can exit the bank solvently without any sequestration or without loss of your business or your assets — I’ve heard grown men crying down the phone.

“It’s a really emotional moment… to get that release and to get to live to fight another day because it becomes very combatant… and you become entrenched in the fight as opposed to be being able to step back and look at the solution.”

Davidson says he can empathise after Conduit had to pare back its staff, after a period of expansion, to just him in his spare room, before building the numbers back up again.

Headcount now amounts to 11, and “we’re in a situation now where this is our tenth year and we’ve seen a fairly significant level of turnover growth and profit growth over the last year and a half.”

The company says that between 2015 and 2016, revenues grew by 400 per cent and profits by 700 per cent, with similar figures predicted for 2016-2017.

As well as developing a private finance arm, it is building a channel for ex-bankers, and looking to recruit a network of up to 30 consultants across the UK. “That could give us significant turnover and net profit growth without a significant increase in overhead,” says Davidson.

It is also moving offices in the capital to George Street in October, with plans for regional sites on the horizon, with Davidson saying a critical mass of about £500,000 of turnover “would warrant some more bodies in an office”. Glasgow is top of the list, with Aberdeen also on the cards.

Tech is also set to play a growing role for the firm, with Davidson highlighting its software platform allowing it to generate more transactional flow, which he believes it is the first of its kind in the UK.

It allows borrowers to fulfil a transaction themselves, and has not been done in the SME and property space, he adds.

Davidson says the business didn’t take the journey he expected, starting out as product-led, but having become “more of an advisory-style business where you really have to dig deeper and understand the client’s wider objectives”.

30-SECOND CV

Born: 1978, Argyll

Education: Falkirk High School then college, neither were really for me

First job: Pension/bond administrator for J Rothschild Assurance

Ambition while at school: Vet, professional rugby player or PE teacher

What car do you drive? Audi RS5, due a change

Favourite mode of transport: Train for work. Cycling for trying to get in shape or water skiing or sailing for fun

Music: Mixed – at 39 being told to turn your music down is amusing (to me)

Kindle or book? Book but rarely; I regret not having time to read more

Can’t live without: Lisa (wife), Millie (4) and Lottie (2), and my iPhone

What makes you angry? Entitlement, laziness and child poverty in Scotland

What inspires you? People who have overcome adversity in business/life/sport – it’s free fuel

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